5 HR and people ops pitfalls to avoid when expanding to the Netherlands

Moving to a new market is a wonderful way to create new opportunities for growth. However, new markets also come with their own unique risks and challenges – especially for HR and people ops teams.

In our experience, the pitfalls foreign HR teams are most likely to fall into occur simply by being unaware of the local laws and market expectations. That’s why it’s especially important that your business has a knowledgeable partner at your side – one who can help you avoid common pitfalls while finding opportunities for success.

After more than 30 years of supporting businesses during their move to the Netherlands, we’ve noticed a few common pitfalls that non-Dutch HR teams are likely to fall for. We put together the 5 most common pitfalls to be aware of if you’re investigating how to approach your people ops in the Dutch market.

#1: Assuming the talent market is the same as your home market

This pitfall needs to be mentioned all the way at the top of this article, because it’s an easy fact to forget. It can be very tempting to simply copy/paste your people operation procedures to the Netherlands from your home market – but this leaves room for a lot of risk.

Demand for skills, cost of living, lifestyle, etc., are just a few factors that influence a worker’s expectations from employers. These factors vary greatly between markets around the world, which means you need to research and align your approach to talent with these in mind.

When developing a compensation package for the Netherlands – try not to make assumptions, even if it seems obvious. For example, American companies always have the expectation that they need to offer healthcare and/or dental plans to their Dutch workforce. Not only is this expectation incorrect but knowing that all individuals in Europe need their own insurance means that the budget could be re-allocated to their base salary or in some other form.

#2: Getting stuck applying for the IND recognized sponsor status

The Dutch Immigration and Naturalisation Service (IND) is the official agency of the Netherlands that manages visas, residence, and citizenship status of non-Dutch people. To ensure your business has the means to support somebody throughout their residence in the Netherlands, the IND will need to evaluate your business. Until you have successfully provided the IND with the information they need, the agency will not be able to approve any visas or residence allows for your employees. Businesses who pass this evaluation are registered with the IND as recognized sponsors.

The motivation of the IND is to grant this status to companies who can prove their long-term stability and compliance with Dutch labour law and immigration procedures. Therefore, new and growing companies can sometimes have trouble applying for this status promptly.

Fortunately, there are solutions for businesses who need to hire from abroad with more urgency. To be a recognized sponsor of the IND is only necessary for some types of visas, such as the Highly Skilled Migrant, however your situation may qualify you for other types of visas. If you’ve exhausted all your options with the IND, you can still hire the people you need through an employment agency with payroll services.

#3: Ignoring the Health and Safety rules for your physical location

Foreign businesses aren’t the only businesses that make this mistake. In 2016, only 45% of businesses in the Netherlands fully complied with the Working Conditions Act – so, enforcement of this law has become stricter over the years. Every business with a physical location, including office jobs, requires some form of action from the business to comply.

The risk new businesses run in this regard is achieving compliance before they start up their operations. Failure to do so could mean your business is slapped with a nasty fine.

#4: Limiting your sight to the Randstad region

Everyone is familiar with the capital of The Netherlands – Amsterdam. If you’re a bit further into your business development research, then you’ve mostly likely heard of the “Randstad” region of the Netherlands (Amsterdam, The Hague, Rotterdam and Utrecht) being your best options for relocation.

Each city in the Randstad region has its perks – but don’t let yourself be limited by these four cities. Unless your business has a specific reason to tie yourselves to one location (for example, Rotterdam to be close to the harbour), consider looking outside of “the big four” cities. You’ll find more specialized business groupings across the country, and maybe even save on costs to locate to a less-populated area of the Netherlands. We wrote up a guide describing the geography of the Netherlands and where these special groupings are found.

#5: Assume you must do everything yourself

Part of what makes the Netherlands so attractive to foreign businesses is the fact that we are so accepting of non-Dutch customs and language. There is a thriving industry in the Netherlands of professional services for foreign or English-speaking businesses to help ease the burden of the manual work it takes to run a business.

Between the expat-friendly legal, financial, and employment services you can find across the Netherlands, it is very doable for your core team to focus on the work that matters while contracting out everything else with confidence.

(We also know that you have plenty of choices, which is why we try to keep everything a foreign business needs – operationally and strategically – under one roof. This helps our clients stay in complete control over all the moving pieces of their business. Get in touch with our team to learn more.)